From Brussels to DC: Will the Industry’s Big Asks Deliver a Sure Ride?

A policymaker walks into a lab and sees a carbon-slimming technology. He’s excited. Less carbon in the sky!

“Marvelous,” he says. “If I invest €300 million in this, how much will I lose?”

The technologist pauses.

“€300 million.”

It’s an old joke, slightly updated for the energy transition. But like most good jokes, it lingers because it points to something uncomfortable: the gap between intention and outcome, between spend and system effect.

This week, in both Brussels and Washington, industry groups are making serious, well-argued requests for regulatory refinement—on SAF mandates, emissions trading, tax credits, and modeling frameworks. These are not frivolous asks. They are grounded in real constraints: capital intensity, long development cycles, feedstock complexity.

But there is another question worth asking. Not whether these policies improve the rowboat— but whether they account for the ocean. Because projects don’t fail in spreadsheets. They fail in weather.

The FOAK Problem Nobody Writes Down

In project finance, we like to think in two numbers:

• cost of capital
• risk premium

But there’s always a third number, rarely acknowledged: the uncertainty premium. That’s the price of the ocean—the storms you didn’t model, the timing mismatches you didn’t predict, the policy signals that arrive just late enough to freeze a final investment decision.

And here’s the paradox: Well-intentioned regulatory refinement can sometimes increase that premium. Not by being wrong—but by being pending. A captain, hearing that perfect weather lies ahead, may choose not to sail in decent weather now—only to meet a storm he never saw coming.

Europe: Smoother Curves, Sharper Questions

The European Biodiesel Board (EBB), which represents roughly three-quarters of Europe’s biodiesel and HEFA-based sustainable aviation fuel production, came out this week with a detailed position paper on how to make ReFuelEU actually work on the ground.

At its core, the EBB argument is practical: Europe has set ambitious SAF blending mandates, but the mechanics of getting from here to there are out of sync with how projects are built and financed.

Their headline concern is the step-function design of the mandate—jumping from low single-digit SAF requirements today to much higher levels later in the decade. Instead, they are calling for annual, incremental increases, creating a smoother demand curve that matches how capacity actually comes online. From there, the asks get more technical—but also more revealing:

• A “surplus and pre-fulfillment” system, allowing over-delivery today to be banked for future compliance.
• Adjustments to the EU Emissions Trading System (ETS) so that support mechanisms align with how fuel is accounted for across airports—not just where it is physically uplifted.
• Extension and expansion of FEETS support, narrowing the price gap between SAF and fossil jet fuel over a longer horizon.
• A push to harmonize feedstock eligibility rules under the Renewable Energy Directive, replacing today’s patchwork.
• And the creation of an EU-level SAF market intermediary, akin to the Hydrogen Bank, to help bridge early demand gaps.

None of this is ideological. It is all about one thing: making billion-euro assets financeable in a system that currently behaves in bursts.

And yet, from a fragility perspective, the question shifts. Not whether these mechanisms are rational—but whether, taken together, they reduce timing risk… or extend it. Because every new mechanism—banking, intermediaries, derogations—adds optionality. And optionality in policy can behave like optionality in markets:

It invites waiting. And waiting, in FOAK systems, is rarely neutral. It is often fatal. The deeper issue may not be the slope of the curve, but the synchronization problem:

• mandates move in steps
• capital moves in cliffs
• feedstocks move in cycles
• policy moves in revisions

Aligning those clocks matters more than smoothing any single one.

United States: Stability, with a Side of Signal Risk

In the U.S., the push is coming from the Sustainable Advanced Biofuel Refiners Coalition (SABR), a coalition spanning the domestic value chain—from feedstock producers to refiners to distributors—focused on keeping advanced biofuels economically viable in a volatile policy environment.

SABR is calling for the reinstatement of the Biodiesel Blenders Tax Credit, a long-standing policy tool that has historically helped stabilize margins by offsetting the price gap between biofuels and petroleum-based fuels. But this isn’t just about bringing the credit back.

They want it tightened and targeted:

• Structured to favor domestic production, ensuring taxpayer support reinforces U.S. supply chains.
• Paired with a revised GREET model that removes what they argue are outdated assumptions—particularly around indirect land use change (ILUC).
• And clarified within the broader context of Section 45Z, where overlapping guidance and delayed rulemaking have made it difficult for producers to model future returns.

The subtext is clear. For developers and operators, the problem isn’t just low margins—it’s unknowable margins. And in FOAK systems, unknowability is often worse than risk itself.

Because when multiple policy revisions are in play simultaneously—45Z, GREET updates, credit reinstatement—the system doesn’t experience clarity.It experiences overlapping signals.To a developer, that feels like fog.

Rowboats, Oceans, and the Cost of Almost

Both the EU and U.S. conversations share a common strength—and a common risk. They are sophisticated efforts to improve the vessel:

• smoother mandate curves
• better credit structures
• refined eligibility rules

Taken individually, each proposal reduces a known friction—like good wax on a surfboard. Taken together, they force the real question: does better wax prepare you for the Banzai Pipeline?

Because FOAK history suggests that most failures don’t come from flawed vessels.

They come from misread oceans.

From:

• timing mismatches
• capital hesitation
• policy lag
• and the quiet, compounding effect of uncertainty

The result is a familiar sight: Projects, projects everywhere— permits filed, models run, capital discussed—and not a drop of fuel to burn.

A Final Note from the Waterline

An inexperienced surfer went to a board shaper and said, “Why can’t I catch any waves?”

The shaper looked over the surfer’s board. “You need more volume,” he said.

So the surfer shouted, “WHY CAN’T I CATCH ANY WAVES?”

Turns out, you can shout the ask as loud as you want—but it doesn’t bring better waves.

Category: Top Stories